Carbon Disclosure Project Report 2007 Asia ex-japan

Transcription

1 Report 2007 Asia ex-japan On behalf of 315 investors with assets of $41 trillion Report written by ASrIA by ASrIA with Analysis by Trucost ASrIA project work funded by ASrIA project work funded by The Sigrid Rausing Trust Carbon Disclosure Project (CDP) Paul Dickinson The Sigrid Rausing Trust

2 Carbon Disclosure Project 2007 This report is based on submissions of the Asia80 companies in response to the fifth information request sent by the Carbon Disclosure Project (CDP5) on 1st February This summary report, the full report and all responses from corporations are available without charge from The contents of this report may be used by anyone providing acknowledgment is given. CDP Members 2007 In 2007, CDP launched a Membership option for signatories. CDP Membership allows signatories to have a leading role in the development of CDP and gives the ability to perform improved comparative analysis of company responses through the new online database. The following investors are CDP Members in 2007: ABN AMRO Bank N.V. Netherlands ABP Investments Netherlands AIG Investments U.S. ASN Bank Netherlands AXA Group France BlackRock U.S. BNP Paribas Asset Management (BNP PAM) France BP Investment Management Limited UK Caisse de Dépôts et Placements du Québec Canada Caisse des Dépôts France California Public Employees Retirement System U.S. California State Teachers Retirement System U.S. Calvert Group U.S. Canada Pension Plan Investment Board Canada Catholic Super Australia Ethos Foundation Switzerland Folksam Sweden Generation Investment Management UK Hermes Investment Management UK HSBC Holdings plc UK KLP Insurance Norway London Pensions Fund Authority UK Merrill Lynch U.S. Morgan Stanley U.S. Morley Fund Management UK Neuberger Berman U.S. Newton Investment Management Limited UK Pictet Asset Management Switzerland Rabobank Netherlands Robeco Netherlands SAM Group Switzerland Schroders UK Signet Capital Management Ltd UK Sompo Japan Insurance Inc. Japan Swiss Reinsurance Company Switzerland The Ethical Funds Company Canada The RBS Group UK Zurich Cantonal Bank Switzerland Association for Sustainable & Responsible Investment in Asia

3 CDP Signatories investors were signatories to the CDP5 information request dated 1st February 2007 including: Aachener Grundvermogen Kapitalanlagegesellschaft mbh Germany Aberdeen Asset Managers UK ABN AMRO Bank N.V. Netherlands ABP Investments Netherlands ABRAPP - Associação Brasileira das Entidades Fechadas de Previdência Complementar Brazil Acuity Investment Management Inc Canada Aegon N.V. Netherlands Aeneas Capital Advisors U.S. AIG Investments U.S. Alcyone Finance France Allianz Group Germany AMP Capital Investors Australia AmpegaGerling Investment GmbH Germany ANBID - National Association of Brazilian Investment Banks Brazil ASN Bank Netherlands Astra Investimentos Ltda Brazil Australia and New Zealand Banking Group Limited Australia Australian Ethical Investment Limited Australia Australian Reward Investment Alliance (ARIA) Australia Aviva plc UK AXA Group France Baillie Gifford & Co. UK Banco Bradesco S.A. Brazil Banco do Brazil Brazil Banco Fonder Sweden Banco Pine S.A. Brazil Bank Sarasin & Co, Ltd Switzerland Barclays Group UK BayernInvest Kapitalanlagegesellschaft mbh Germany BBC Pension Trust Ltd UK Beutel Goodman and Co. Ltd Canada BlackRock U.S. BMO Financial Group Canada BNP Paribas Asset Management (BNP PAM) France Boston Common Asset Management, LLC U.S. BP Investment Management Limited UK Brasilprev Seguros e Previdencia S.A. Brazil British Coal Staff Superannuation Scheme UK British Columbia Investment Management Corporation (bcimc) Canada BT Financial Group Australia BVI Bundesverband Investment und Asset Management e.v. Germany CAAT Pension Plan Canada Caisse de Dépôts et Placements du Québec Canada Caisse des Dépôts France Caixa Economica Federal Brazil California Public Employees Retirement System U.S. California State Teachers Retirement System U.S. California State Treasurer U.S. Calvert Group U.S. Canada Pension Plan Investment Board Canada Canadian Friends Service Committee Canada Carlson Investment Management Sweden Carmignac Gestion France Catholic Superannuation Fund (CSF) Australia CCLA Investment Management Ltd UK Central Finance Board of the Methodist Church UK Ceres U.S. CERES-Fundação de Seguridade Social Brazil Cheyne Capital Management (UK) LLP UK Christian Super Australia CI Mutual Funds Signature Funds Group Canada CIBC Canada Citizens Advisers Inc U.S. ClearBridge Advisers Social Awareness Investment U.S. Close Brothers Group plc UK Comité syndical national de retraite Bâtirente Canada CommerzbankAG Germany Connecticut Retirement Plans and Trust Funds U.S. Co-operative Insurance Society UK Credit Agricole Asset Management France Credit Suisse Switzerland Daegu Bank South Korea Daiwa Securities Group Inc. Japan Deka FundMaster Investmentgesellschaft mbh Germany Deka Investment GmbH Germany DekaBank Deutsche Girozentrale Germany Delta Lloyd Investment Managers GmbH Germany Deutsche Bank Germany Deutsche Postbank Privat Investment Kapitalanlagegesellschaft mbh Germany Development Bank of Japan Japan Development Bank of the Philippines (DBP) Philippines Dexia Asset Management France DnB NOR Norway Domini Social Investments LLC U.S. DPG Deutsche Performancemessungs- Gesellschaft fur Wertpapierportfolio mbh Germany DWS Investment GmbH Germany Environment Agency Active Pension Fund UK Epworth Investment Management UK Erste Bank der Oesterreichischen Sparkassen AG Austria Ethos Foundation Switzerland Eureko B.V. Netherlands Eurizon Capital SGR Italy Evli Asset Management Finland F&C Asset Management UK FAELCE - Fundação Coelce de Seguridade Social Brazil FAPES - Fundação de Assistencia e Previdencia Social do BNDES Brazil Fédéris Gestion d Actifs France FIPECq - Fundação de Previdência Complementar dos Empregados e Servidores Brazil First Affirmative Financial Network, LLC U.S. First Swedish National Pension Fund (AP1) Sweden FirstRand Ltd. South Africa Five Oceans Asset Management Pty Limited Australia Folksam Sweden Fondaction Canada Fonds de Reserve pour les Retraites - FRR France Fortis Investments Belgium

4 Fourth Swedish National Pension Fund, AP4 Sweden Frankfurt Trust Investment-Gesellschaft mbh Germany Frankfurter Service Kapitalanlage- Gesellschaft mbh Germany Franklin Templeton Investment Services GmbH Germany Frater Asset Management South Africa FUNCEF Brazil Fundação Assistencial e Previdenciária da Extensão Rural no Rio Grande do Sul- FAPERS Brazil Fundação Atlântico de Seguridade Social Brazil Fundação Banrisul de Seguridade Social Brazil Fundação CESP Brazil Fundação Codesc de Seguridade Social Brazil Fundação Copel de Previdência e Assistência Social Brazil Fundação Corsan - dos Funcionários da Companhia Riograndense de Saneamento Brazil Fundação Real Grandeza Brazil Fundação Rede Ferroviaria de Seguridade Social - Refer Brazil Fundação São Francisco de Seguridade Social Brazil Fundação Vale do Rio Doce de Seguridade Social - VALIA Brazil Gartmore Investment Management plc UK Generation Investment Management UK Genus Capital Management Canada Gjensidige Forsikring Norway Goldman Sachs & Co. U.S. Green Century Capital Management U.S. Green Kay Asset Management UK Groupe Investissement Responsable Inc. Canada Guardians of New Zealand Superannuation New Zealand Hastings Funds Management Limited Australia Helaba Invest Kapitalanlageggesellschaft mbh Germany Henderson Global Investors UK Hermes Investment Management UK HESTA Super Australia Hospitals of Ontario Pension Plan (HOOPP) Canada HSBC Holdings plc UK I.DE.A.M - Integral Development Asset Management France Ilmarinen Mutual Pension Insurance Company Finland Indexchange Investment AG Germany Industry Funds Management Australia ING Investment Management Europe Netherlands Inhance Investment Management Inc Canada Insight Investment Management (Global) Ltd UK Instituto Infraero de Seguridade Social - INFRAPREV Brazil Instituto Sebrae De Seguridade Social - SEBRAEPREV Brazil Interfaith Center on Corporate Responsibility U.S. Internationale Kapitalanlagegesellschaft mbh Germany Jarislowsky Fraser Limited Canada Jupiter Asset Management UK KBC Asset Management NV Belgium KLP Insurance Norway KPA AB Sweden La Banque Postale AM France LBBW - Landesbank Baden-Württemberg Germany Legal & General Group plc UK Libra Fund U.S. Light Green Advisors, LLC U.S. Local Authority Pension Fund Forum UK Local Government Superannuation Scheme Australia Lombard Odier Darier Hentsch & Cie Switzerland London Pensions Fund Authority UK Macif Gestion France Maine State Treasurer U.S. Man Group plc UK Maryland State Treasurer U.S. Meag Munich Ergo Kapitalanlagegesellschaft mbh Germany Meeschaert Asset Management France Meiji Yasuda Life Insurance Company Japan Meritas Mutual Funds Canada Merrill Lynch U.S. Metzler Investment Gmbh Germany Midas International Asset Management South Korea Mitsubishi UFJ Financial Group (MUFG) Japan Mitsui Sumitomo Insurance Co Ltd Japan Mizuho Financial Group, Inc. Japan Monte Paschi Asset Management S.G.R. - S.p.A Italy Morgan Stanley Investment Management U.S. Morley Fund Management UK Munchner Kapitalanlage AG Germany Munich Re Group Germany National Australia Bank Limited Australia National Bank of Kuwait Kuwait National Pensions Reserve Fund of Ireland Ireland Natixis France Nedbank Group South Africa Needmor Fund U.S. Neuberger Berman U.S. New York City Employees Retirement System U.S. New York City Teachers Retirement System U.S. New York State Common Retirement Fund U.S. Newton Investment Management Limited UK NFU Mutual Insurance Society UK Nikko Asset Management Co., Ltd. Japan Norinchukin Zenkyouren Asset Management Co., Ltd Japan Northern Trust U.S. Old Mutual plc UK Ontario Municipal Employees Retirement System (OMERS) Canada Ontario Teachers Pension Plan Canada Opplysningsvesenets fond (The Norwegian Church Endowment) Norway Oregon State Treasurer U.S. Orion Energy Systems, Ltd U.S. Pax World Funds U.S. Pension Plan for Clergy and Lay Workers of the Evangelical Lutheran Church in Canada Canada PETROS - The Fundação Petrobras de Seguridade Social Brazil PGGM Netherlands Phillips, Hager & North Investment Management Ltd. Canada Association for Sustainable & Responsible Investment in Asia

5 PhiTrust Active Investors France Pictet Asset Management Switzerland Pioneer Investments Kapitalanlagegesellschaft mbh Germany Portfolio 21 and Progressive Investment Management U.S. Portfolio Partners Australia Prado Epargne France PREVI Caixa de Previdência dos Funcionários do Banco do Brasil Brazil Prudential Plc UK PSP Investments Canada Rabobank Netherlands Railpen Investments UK Rathbone Investment Management / Rathbone Greenbank Investments UK Reynders McVeigh Capital Management U.S. RLAM UK Robeco Netherlands Rock Crest Capital LLC U.S. Royal Bank of Canada Canada SAM Group Switzerland Samsung Investment Trust Management Co., Ltd. South Korea Sanlam Investment Management South Africa Sauren Finanzdienstleistungen GmbH & Co. KG Germany Savings & Loans Credit Union (S.A.) Limited. Australia Schroders UK Scotiabank Canada Scottish Widows Investment Partnership UK SEB Asset Management AG Germany Second Swedish National Pension Fund (AP2) Sweden Seligson & Co Fund Management Plc Finland Service Employees International Union U.S. Seventh Swedish National Pension Fund (AP7) Sweden Shinhan Bank South Korea Shinkin Asset Management Co., Ltd Japan Shinsei Bank Japan Siemens Kapitalanlagegesellschaft mbh Germany Sierra Club Mutual Funds U.S. Signal Iduna Gruppe Germany Signet Capital Management Ltd UK SNS Asset Management Netherlands Société Générale France Société Générale Asset Management UK UK Sompo Japan Insurance Inc. Japan Standard Chartered PLC UK Standard Life Investments UK State Street Corporation U.S. State Treasurer of North Carolina U.S. Storebrand Investments Norway Stratus Banco de Negócios Brazil Sumitomo Mitsui Financial Group Japan Sumitomo Trust & Banking Japan Superfund Asset Management GmbH Germany Swedbank Sweden Swiss Reinsurance Company Switzerland Swisscanto Switzerland TD Asset Management Inc. and TD Asset Management USA Inc. Canada Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA- CREF) U.S. Terra Kapitalforvaltning ASA Norway TfL Pension Fund UK The Bullitt Foundation U.S. The Central Church Fund of Finland Finland The Collins Foundation U.S. The Co-operative Bank UK The Co-operators Group Ltd Canada The Daly Foundation Canada The Dreyfus Corporation U.S. The Ethical Funds Company Canada The Local Government Pensions Institution (LGPI)(keva) Finland The RBS Group UK The Russell Family Foundation U.S. The Shiga Bank, Ltd (Japan) Japan The Standard Bank Group Limited South Africa The Travelers Companies, Inc. U.S. The United Church of Canada - General Council Canada The Wellcome Trust UK Third Swedish National Pension Fund (AP3) Sweden Threadneedle Asset Management UK Tokio Marine & Nichido Fire Insurance Co., Ltd. Japan Trillium Asset Management Corporation U.S. Triodos Bank Netherlands Tri-State Coalition for Responsible Investing U.S. UBS AG Switzerland Unibanco Asset Management Brazil UniCredit Group Italy Union Asset Management Holding Germany Unitarian Universalist Association U.S. United Methodist Church General Board of Pension and Health Benefits U.S. Universal Investment Gesellschaft mbh Germany Universities Superannuation Scheme (USS) UK Vancity Group of Companies Canada Vermont State Treasurer U.S. VicSuper Proprietary Limited Australia Vital Forsikring ASA Norway Wachovia Corporation U.S. Walden Asset Management, a division of Boston Trust and Investment Management Company U.S. Warburg-Henderson Kapitalanlagegesellschaft mbh Germany West Yorkshire Pension Fund UK WestLB Mellon Asset Management (WMAM) Germany Winslow Management Company U.S. YES BANK Limited India York University Pension Fund Canada Zurich Cantonal Bank Switzerland

6 Executive Summary The goal of the Carbon Disclosure Project is to facilitate a dialogue, supported by quality information, from which a rational response to climate change will emerge. In 2007, this dialogue between Asian companies and global investors took a significant step forward. CDP5 includes responses from 44 Asia ex-japan companies and, for the first time, offers compelling insights into Asian companies emerging policy responses to climate change. This is meaningful because most of these companies do not have the benefit of government policy guidance or carbon trading markets which would create transparent price incentives for action. Instead, they are responding to a range of pressures from customers, competitors, investors, and global regulators which promise to shape their long-term competitiveness. In CDP5, the most important trends reflect the growing breadth and depth of the responses In CDP5, the most important trends reflect the growing breadth and depth of the responses. Although Asia continues to have the lowest regional response rate within the CDP universe at 26%, our new sample in 2007 attracted responses from a range of leading Asian companies. Stated simply, it will matter to the Asian climate change debate what companies like Posco, TSMC, ICBC, Cathay Pacific, Siam Cement, and Infosys decide to do about their carbon emissions. They are country champions and important global brand names. For investors, the key conclusions to emerge from ASrIA s analysis of the 2007 CDP responses are: Rising Materiality A range of Asian companies are providing more material responses which describe strategic business initiatives to curtail carbon emissions or develop new process and product strategies; New Industry Resources Companies working on climate change strategies often rely on industry associations and global NGOs to provide guidance on carbon disclosure and policy options; Governance Matters Corporate governance and the degree of top management engagement are critical determinants in the management and disclosure of carbon emissions and the development of formal initiatives; Watch Korea and India Korean companies are the Asian leaders in more comprehensive carbon reporting while Indian companies were the largest group of new respondents; and Tech and Telecoms Lead, Banks and Utilities Lag The quality and quantity of responses from Asia s tech and telecoms companies is notable, while Asia s banks and utilities lag their global counterparts in responding to CDP. CDP5 also provides some valuable insights into future Asian climate change reporting and strategy development. In particular, thanks to the increase in the Asian sample in 2007, we have more tools to assess peer group competition on carbon fundamentals. With initial responses from a sample of Chinese stateowned enterprises in 2006 and 2007, it appears that the CSR reporting process Association for Sustainable & Responsible Investment in Asia

7 which China s leading companies are beginning to embrace may provide new disclosures on carbon emissions. And finally, the 2007 responses offer initial data points on the growing impact of supply chain carbon reporting initiatives and global sector initiatives affecting sectors like airlines and technology. Taken together, these developments suggest that CDP continues to act as a valuable catalyst and to identify important leading indicators. CDP5 Asian Metrics Companies surveyed 166 Response rate 26% Highest response rate by country India 42% Korea 36% Highest response rate by sector Telecoms 50% IT 45% Country with largest # of new respondents Country with largest # of emissions disclosures India Korea Respondents discussing CDM projects 17 Respondents with strategic initiatives 9 Most comprehensive response Largest new respondent CLP ICBC

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9 Contents Investment Trends From 1-D to 2-D Asian Responses Becoming More Strategic Industry Associations and NGOs Providing the Key Resources Top Management Engagement in Issues Only Just Emerging Country Focus Quantity versus Quality Sector Focus Two Leaders, Two Laggards Asian Bankers Waiting for Guidance Asian Utilities Hiding Under a Cloud Asia s Tech Players New Carbon Sophistication Can You Hear Us Now? Country Regulations Data Analysis Veteran and New Participation Market Capitalization Regional Assessment Sector Assessment India versus Korea Governance Matters Quantitative Disclosure The Carbon Disclosure Project Appendices Appendix I CDP5 Questionnaire Appendix II Glossary Appendix III Asia ex-japan Companies

10 The better respondents in 2007 provided clear examples of a move from awareness to action, with comprehensive carbon policies driving investment, new products, and technology development.

11 Investment Trends Materiality Rising In 2006, our CDP Asia report highlighted the crucial role of country-specific government policy in shaping carbon disclosure trends, Korea's positive and relatively distinct policy initiatives, and the reporting challenges faced by Asia's conglomerates. In 2007, with an expanded sample, we see greater dispersion in the results both in terms of response quality and in terms of materiality. The most positive trend is that a meaningful sub-set of respondents in countries like Korea are producing increasingly strategic responses which link carbon reporting disciplines to more fundamental business decisions. Asian companies are also beginning to respond to a broader range of catalysts for carbon reporting, including a new focus on customer concerns, which have the potential to spur new investment and product development trends. While Asian governments retain a powerful role in establishing incentives for carbon emissions reporting, local and global industry associations are emerging as a critical source of guidance for Asian companies seeking to respond to climate change issues responses link carbon reporting to business decisions At the country level, Korean respondents continue to demonstrate broad-based programs. The Indian portion of our sample saw the highest increase in response rates, but many represent an initial and incomplete effort. At the sector level, responses by Asian financials lag their global counterparts by a large margin with low response rates and a limited understanding of the role which the finance sector can play in shaping a country's sustainability footprint. By contrast, Asia's leading tech and telecom companies are developing carbon policies as a natural extension of their environmental management systems (EMS) and reporting strategies. Asia's largest emitters thermal power generators are largely absent from this year's sample with the exception of a handful of higher level reporters such as Hong Kong's CLP Holdings. Responding companies in CDP5, Asia ex-japan China China Unicom Hong Kong CNOOC Ltd Hang Seng Bank Ltd Industrial & Commercial Bank of China, Asia Ltd Cathay Pacific Airways Ltd MTR Corp Swire Pacific Ltd CLP Holdings Hong Kong Electric Holdings Ltd India Maruti Udyog Ltd ITC Ltd Oil & Natural Gas Corporation Ltd ICICI Bank Ltd Housing Development Finance Corporation Ltd Reliance Capital Punj Lloyd Ltd Wipro Ltd Bharat Heavy Electricals Ltd Infosys Technologies Ltd Tata Steel Ltd Bharti Airtel Ltd National Thermal Power Indonesia PT Astra International Sector Telecommunication Services Energy Financials Financials Air Transport Industrials Industrials Utilities Utilities Consumer Discretionary Consumer Staples Energy Financials Financials Financials Industrials Information Technology Industrials Information Technology Materials Telecommunication Services Utilities Consumer Discretionary 1

12 From 1-D to 2-D Asian Responses Becoming More Strategic New disclosures on investment, products, and technology development The most positive trend in this year's Asian CDP responses was the shift toward disclosure of more strategic corporate policies linked to climate change. The better respondents in 2007 provided clear examples of a move from awareness to action, with comprehensive carbon policies driving investment, new products, and technology development. The underlying theme is that although climate change remains a relatively new policy area in Asia, leading companies are now taking the initiative and positioning themselves to capitalize on a shift in policy and growing consumer awareness. Posco Posco is poised to significantly lower the carbon-intensity of its future steel-making facilities with the commercialization of its FINEX and strip casting steel production methods, which are significantly more energy efficient than conventional methods. The FINEX and strip casting technologies have been the focus of heavy R&D investment since 1989 and the first facility with the new streamlined production process is now in operation. Swire Pacific Swire reports that in conjunction with the government of Hong Kong, it has been running a pilot program at several landfill sites to capture methane and direct it to the local power grid. Already successful on one of its landfills, Swire is currently exploring ways to make use of methane from other landfills under its management for power generation. Cathay Pacific Cathay Pacific Airlines, a subsidiary of Swire, plans to address climate change by offering purchasable carbon offsets to its customers and developing more energyefficient flight paths. With a limited palette of emissions reduction approaches in the airline industry, these two efforts underscore Cathay s growing focus on welldefined initiatives. Offering credits to customers has the potential to be a tangible, Responding companies in CDP5, Asia ex-japan Korea Hyundai Motor Company Ltd S-Oil Corp Shinhan Financial Group Company Ltd Hynix Semiconductor Inc LG Philips LCD Samsung Electronics Co Ltd Posco KT Corp SK Telecom Company Ltd Korea Electric Power Corp Malaysia Malayan Banking Singapore CapitaLand Ltd Overseas Chinese Banking Singapore Airlines Ltd Taiwan Acer Inc. Delta Electronics Taiwan Semiconductor Manufacturing Co Ltd United Microelectronics Chunghwa Telecom Co Ltd Thailand PTT Public Company Ltd Siam Cement Consumer Discretionary Energy Financials Information Technology Information Technology Information Technology Materials Telecommunication Services Telecommunication Services Utilities Financials Financials Financials Air Transport Information Technology Information Technology Information Technology Information Technology Telecommunication Services Energy Materials 2 Association for Sustainable & Responsible Investment in Asia

13 easy access method that would permit consumers to partner with Cathay to reduce their carbon footprint. By contrast, developing more direct flight paths through international efforts is an operational solution with a lower profile but of greater value to underlying emissions reduction. CapitaLand CapitaLand, one of Singapore's leading property developers, has established a range of green building initiatives. Under the auspices of the company's Green Committee, the Green Building Program has implemented guidelines that promote best practices throughout the lifecycle of each project undertaken by CapitaLand. These guidelines focus on improved energy efficiency through more environmentally friendly design, architecture, and environmental management systems (EMS). With new green building standards on the way in Singapore, CapitaLand's demonstrated track record in green design has the potential to provide a strategic edge. While the companies above stood out for their initiatives to develop innovative products, services, and technologies, a second tier of respondents is poised to progress in coming years as their systems and analytical efforts mature. Although commentary was often limited, it is evident that a number of respondents are in the early stages of implementing or assessing CDM projects, evaluating investments in renewable energy, and establishing environmental management systems to address potential methods to respond to shifting consumer needs. Still in the preliminary phase of the process, the responses of these companies were not necessarily data-rich. They do, however, indicate the incremental stages necessary to system-wide climate change engagement. A second tier of respondents is building project capacity Table 1. Company Climate Change Initiatives 3

14 Industry Associations and NGOs Providing the Key Resources Industry associations filling the policy gap One new trend clearly apparent in the CDP5 is a growing reliance by Asian respondents on industry associations for guidance on carbon reporting and management strategies. The industry associations appear to be filling a vacuum created by limited government initiatives with a growing body of global research on best practice responses at the industry level in regards to climate change. Companies in Asia typically lack consistent drivers for responding to climate change and resources to clarify emerging standards. By contrast, in the EU, companies seeking to respond to climate change issues benefit from high levels of disclosure, stronger regulatory incentives, heavy monitoring requirements and growing shareholder feedback. Under the Kyoto Protocol, Asian countries, as developing markets, are recognized as being vulnerable to adverse economic impacts of climate change and are therefore not required to meet carbon emissions caps. As a result, only Japan faces binding emissions reduction targets and is included in the rules which support international emissions trading. Most Asian government policies, directives, and regulatory systems related to carbon emissions and climate change are embryonic, featuring headline policy statements but limited signs of implementation. In addition, initial policy frameworks typically have a flexible timeframe and are often overlooked if the policy focus shifts to industrial development, which may conflict with efforts to restrict the growth of carbon emissions or improve energy efficiency. Tech and building materials companies linking up with global initiatives As a result, Asian companies, especially those in globally competitive export sectors such as technology and building materials are increasingly relying on industry associations to shape their emerging carbon emissions policy responses. Some of the more frequently named associations are local, but there is strong representation from international groups, many of which can provide a tested roadmap for sector-specific carbon emissions reporting. The World Business Council for Sustainable Development (WBCSD) has emerged as one common resource for companies developing a response to climate change issues. Eight different companies from China, Hong Kong, Korea, Thailand and Taiwan make reference to either being members of WBCSD, following its guidelines, or using its carbon calculation methodology. This represents 18% of the responding sample. For example, the president of PTT Public Company in Thailand is a council member of the Thailand Business Council for Sustainable Development (TBCSD) and is, as a result, committed to advocating BCSD policy positions, co-chairing working groups, and ensuring the adoption of sustainable management practices within PTT. Notable references to participation in industry groups appeared in the following responses: Siam Cement (WBCSD Cement Initiative) Siam Cement Group (SCG) notes that the Thai government has not yet established policies and regulatory requirements directly related to climate change. Nonetheless, SCG has implemented voluntary specific net greenhouse gas (GHG) reduction targets in order to track internal performance and respond to concerned stakeholders such as local NGOs, WBCSD, and the government. SCG participates in the WBCSD Cement Sustainability Initiative which requests all members to set direct carbon emissions reduction targets. TSMC and UMC (TSIA) Four of CDP5's five Taiwan responses are from technology companies, three of which referenced participation in industry group efforts. Both Taiwan Semiconductor Manufacturing Co. Ltd (TSMC) and United Microelectronics (UMC), the two largest semiconductor companies in Taiwan are members of the Taiwan Semiconductor Industrial Association (TSIA), which is a member of the World Semiconductor Council (WSC). 4 Association for Sustainable & Responsible Investment in Asia

15 A key program of the WSC calls for members to reduce perfluorocarbon (PFC) emissions by at least 10% by 2010, even as semiconductor production is increasing. PFCs have 6,500 times the greenhouse warming potential of carbon dioxide (IPCC 2001). As a result, Taiwan's largest semiconductor players are committed through the TSIA and WSC to the PFC reduction program and the external verification of PFC emissions data. Cathay Pacific (IATA) Cathay Pacific is a member of the International Air Transport Association (IATA) which advocates a global carbon trading scheme for aviation. In response to an estimate by IATA that inefficient air traffic management is responsible for losses amounting to 12% of total fuel consumption, Cathay states that it works closely with IATA, the Mainland Chinese authorities, and partners in the airline industry to help optimize airspace and flight procedures in the region. Cathay also supports IATA's fuel efficiency goals and has a representative on IATA's Environmental Committee. CNOOC (API) CNOOC, the third largest National Oil Company (NOC) in China and the leader in petroleum exploration and production, uses the American Petroleum Institute's (API) SANGEA software to measure and report GHG emissions. Originally developed by Chevron Texaco and donated to the API, this program is designed to assist petroleum companies with estimating, managing, and reporting GHG emissions by aggregating the GHG data received and providing an industry-wide snapshot of emissions levels for reporting entities. GHG calculator developed by Chevron and used by CNOOC Korea A Model of Government-Industry Collaboration Many of CDP5's Asian responses reference industry collaboration but not clear government guidance. A more integrated model has emerged in Korea, which is similar to the pattern common in Japan where the government has worked alongside the industry associations to build capacity. Coordinated by the Ministry of Commerce, Industry & Energy (MoCIE), eight task forces address heavy energy consuming sectors such as power generation, iron and steel, petrochemicals, cement, pulp and paper, semiconductor, automobile, and refining. Each task force is comprised of representatives from companies, respective industry associations, and the government. These task forces have been focusing on: (1) guidelines for measuring CO 2 emissions and sector-specific strategies for climate change; (2) voluntary reduction targets and disclosure processes; and (3) planning for voluntary emissions trading which is slated to be launched in The industry task forces have been the focal point for the Voluntary Agreement for Energy Saving & GHG Emissions Reduction, which was initiated by the government in January Out of approximately 1,100 companies participating in the voluntary agreement, more than 60% reported energy efficiency improvements amounting to 1.8m tonnes of oil equivalent and cuts in CO 2 emissions of 1.4m tonnes of carbon between 1998 and Based on the achievements of these task forces, MoCIE plans to upgrade government-industry collaboration with the formation of a Government-Industry Panel on Climate Change Initiatives sometime in The goal of this initiative will be to ensure even more effective implementation of carbon-linked policies. The Korean government has also played an active role in supporting industry-level carbon performance commitments. In the CDP5 responses, for example, Hyundai Motor indicated that the government played an important role in finalizing the voluntary agreement with the three major automobile manufacturers' associations in the EU to reduce CO 2 emissions targets to 140g/km, from current levels of 186g/ km, by 2009 for the newly registered passenger cars in the EU Community. Samsung Electronics also mentioned that the government entered into a voluntary agreement with the World Semiconductor Council (WSC) in 1999 to reduce PFC emissions by 10% by 2010 from a 1997 baseline. 5

16 Top Management Engagement in Issues Only Just Emerging The CDP Asia sample presents high variability in the extent to which top management is addressing issues of reporting and strategy. This is an important subject because corporate governance is a critical variable in assessing long-term corporate environmental performance. To track this variable, the CDP questionnaire sought information on board committees and executive management structures used to provide oversight on corporate climate change issues. Based on data available in the 2007 responses, however, in many instances it would be difficult to conclude that the responses given can be regarded as an official statement of corporate policy. Active engagement vs. statements of intention critical to credibility One aspect of this variability is exemplified by the brevity of some submissions. Such responses are unlikely to accurately represent corporate policy on these complex issues, and it is therefore difficult to gauge the ongoing level of engagement with climate change. This is not to say that such responses were representative of the sample as a whole; variability is also apparent in more detailed responses which appear to demonstrate a high level of engagement. However, the variability of the sample presented persistent issues of reliability and scope, making uniform assessment of the sample a challenge. Indeed, common metrics mask huge differences in the quality of the responses. One of the key differences in responses throughout the sample was evidence of active engagement as compared to statements of intention. For example, many responses reported recently established planning committees, initiatives under consideration, and possible future reduction targets. While some of these responses may represent a management that has recently become genuinely engaged in addressing carbon emissions, it could also be that management commitments are still tentative. It is also possible that that lower level management or operational staff submitted responses with little direct upper management oversight. Among the responses providing useful indications of management involvement, Acer and Hyundai Motors offered interesting insights into the intersection between climate governance and corporate strategy: Companies looking past home country standards Acer Acer's response indicates that top management views climate change as an issue which must be evaluated in terms of the global footprint of their operations. Rather than framing its strategies in terms of its home country standards, it is developing policies which are consistent with the GHG reduction policy framework in the various countries in which it operates. For Acer, this will likely mean that trends in the EU and North American markets will be particularly influential. Its response also stresses a commitment to transparency, not just domestically but internationally, with a new policy to ask suppliers to disclose environmental performance data including carbon emissions and energy consumption. Hyundai Motors Hyundai Motors reports ongoing engagement with policymakers both domestically and internationally. Hyundai's products are subject to CO 2 emissions standards in the United States, California (with particular regulations), Europe, Canada, and China. As a result, the company has established a special executive management team which reports to the board on climate change issues. As part of the corporate planning office, an environmental management team has also been created to handle monitoring and reporting of climate change issues. It also supervises technical issues including research on financial planning tools which will make it possible to take climate change into account for capital expenditure. In addition, managers responsible for performance on energy use and carbon emissions targets are recognized through the job appraisal and promotion process. 6 Association for Sustainable & Responsible Investment in Asia

17 Country Focus Quantity versus Quality Thanks to the increase in the sample size, this year's Asian CDP offers a more realistic picture of trends at the country level. Indeed, it is becoming easier to form a picture of a "Korean" response versus a "Singaporean" response. This should not be surprising as reporting norms are usually set at the country level. Nonetheless, the increase in sample size and a new contingent of first-time reporters has brought much greater diversity in the quality of responses with some meeting international best practice standards and others just touching the surface. In general, material reporting continues to lag in nations with few drivers, while improvement is evident in countries where leading companies have a more international footprint. Quality rests on government drivers and multinational aspirations Veteran Respondents Responses from veteran respondents set the standard for quality submissions across the region. This is consistent with our finding that repeated participation coincides with capacity building within companies to establish internal monitoring and reporting systems. For example, veteran participants were much more likely to submit quantitative, verified information suitable for global comparison. In general, the higher quality responses originated from Korea, Hong Kong, Taiwan and India. Not only did these better responses report on specific emissions, but many also cited plans to move toward carbon neutrality and to invest in CDM projects. This likely reflects the fact that companies from Korea, Hong Kong, and Taiwan have long operated in global markets and are more likely to perceive climate change as an issue which will shape long-term operations and customer perceptions. Of the four high quality Indian responses, three came from veteran respondents, with significant international exposure or brand equity: Infosys, Bharti Airtel and ITC. New Participants In most instances, responses from new participants in CDP Asia reflected an initial effort to address the climate change dialogue. Responses from Indian companies, which represented half of all new participants, tended to be brief and in some instances expressed a preliminary understanding of the risks and direct impacts posed by climate change to their business. Other responses from new participants reflected stronger foundations, typically due to existing environmental management or community engagement efforts. In many cases, however, internal mechanisms for carbon reporting were not documented or remain under development. More references to CDM and environmental management systems Two Hong Kong listed companies ICBC and Cathay Pacific were the only new participants that submitted quantitative carbon data. ICBC, one of China's "big four" banks and the world's largest IPO in 2006, submitted a solid first-time report which indicated a commitment to the development of energy efficiency strategies. Cathay Pacific's response was a reflection of ongoing work conducted by parent company Swire Pacific to develop internal systems for carbon monitoring and programs to address specific carbon emissions impacts. While this was the initial submission for Cathay Pacific and Swire, it is clear that their failure to respond to CDP in previous years was not an indication that they were standing still. New Respondents Participation in CDM projects, concern about brand equity, and preparation for incremental country-level policy development were some drivers mentioned by companies previously invited to participate in the CDP who responded for the first time this year. One new respondent, Oil & Natural Gas Company (ONGC), already has two existing CDM projects, 11 DNA approved projects, and 15 more in development. It is the leading central government-controlled company active in developing CDM projects in India. 7

18 Concern about brand equity and consumer sentiment is clearly beginning to play a more significant role in the development of climate change policies by Asian CDP respondents. New respondents in the 2007 sample featured numerous references to rising environmental awareness by consumers and potential implications for operations and long-term profitability. Over the past year, there have been few new broad climate change commitments announced by Asian governments. Nonetheless, incremental policy steps are creating incentives for more focused companies prepared to assume a leadership role. 40% of the respondents which provided improved disclosure indicated that forthcoming regulation was an impetus for new corporate policies on carbon emissions. Hong Kong and China companies moving torwards global norms Country Focus Hong Kong and China Responses from Hong Kong and China reflect a relatively mature understanding of climate change, potential impacts on business, and relevant industry specific requirements. Given the sophistication of the Hong Kong corporate sector, it should not be surprising that these responses increasingly reflect global peer group standards. In keeping with broader sustainability reporting trends, it is also not surprising that the Hong Kong sample is dominated by companies which are either government-regulated or sensitive to consumer perceptions, such as local power companies, CLP Holdings and Hongkong Electric, the MTR Corporation (Hong Kong's subway operator) and air carrier Cathay Pacific. Hong Kong companies, because of their regional and global exposure, have often faced reporting challenges common to conglomerates operating in diverse businesses and markets. This is especially true where there are varied ownership and control structures which can inhibit access to comparable operating data. CLP's response sets a high standard both in terms of detail on emissions and a range of relevant policy developments in its different markets. First-time respondent Swire Pacific also offers an encouraging snapshot of energy savings projects and CDM work which is underway in its high profile property and beverages businesses. CDP Asia had three responses from Chinese companies in 2007 China National Offshore Oil (CNOOC), China Unicom, and ICBC. Due to the dominant size of ICBC's Hong Kong listing, however, it was counted as a Hong Kong company. Of the three, banking sector leader ICBC was unusual, as a first-time respondent, in providing preliminary carbon emissions figures based on energy consumption and business travel. The second notable respondent, CNOOC, failed to disclose its emissions but is pursuing CDM projects as one strategic response to its carbon footprint. India leads with biggest increase in new respondents India India was the standout growth country in the CDP Asia sample in It was not only the country with the most companies new to the process, but Indian companies also represented 50% of new responses in general. With increased representation in the Asia ex-japan universe, responses from India were also the most diverse of any other nation, representing every industry sector in the project. The positive response rate trend must be balanced against the fact that a high percentage of new respondents are clearly at the early stages of developing a thorough understanding of the issues and global reporting norms. While responses from the Indian telecom and consumer staples sectors compared favorably with their regional peers, respondents from other sectors displayed a less mature understanding of the issues. If patterns from elsewhere in Asia hold true, this gap in response quality should be remedied over time as regulatory drivers increase and the domestic audience for more sophisticated reporting becomes more vocal. 8 Association for Sustainable & Responsible Investment in Asia

19 Strong Indian submissions came from participants such as Bharti Airtel, Infosys, ICICI, ITC, and Wipro, all of which face global competition or changing market trends. Despite these strong responses, improved performance cannot be taken for granted. While Indian companies are open to participation in CDP, participation alone cannot always be linked to progress on carbon reporting or related business efforts, even in high impact sectors. The most positive trend in the Indian sample was clear evidence that Indian companies are making growing commitments to the development of CDM projects. In addition to ONGC, ITC, Wipro and Tata Steel mention that they are either considering CDM projects or are already in the process of setting up CDM projects. This increase in references to CDM projects is consistent with trends across Asia in 2006 as governments have implemented the critical UNCCC regulatory mechanisms for approval of CDM projects. Indonesia PT Astra, generally considered one of Indonesia's strongest reporters, made its debut in CDP in A holding company, it was unable to offer quantitative data for its overall operations. Nonetheless, reporting on a range of environmental initiatives suggests that among other things, the company is testing conversion from diesel to bio-diesel in automobiles that already meet Euro II standards. PT Astra has also set a 10% natural resource utilization reduction target as part of its Environment and Social Responsibility policy which covers its group companies. Korea Korean companies in CDP5 continue to show progress on more comprehensive and strategic responses. One important trend is an increase in companies disclosing carbon reduction targets. While only one Korean company announced targets in CDP4, Posco, S-Oil, KT Corp and Samsung Electronics provided data in this critical area. At the same time, the better respondents made tangible progress on more strategic responses to climate change threats. This was particularly evident in disclosures on specific R&D and investment initiatives by companies like Posco and S-Oil. Two companies, Hyundai Motor and Samsung Electronics, also provided useful material outlining their carbon-related governance structures and core business decision making processes. Hyundai Motor and Samsung provide specifics on governance Although Korean respondents have now established a pattern of capable responses to CDP from leading companies, it was noticeable that new entries in the overall sample tend to be lower level emitters and are less likely to respond. In CDP5, there were 16 new participants in the Korean sample, 62% (10 companies) of which were from non-manufacturing sectors such as construction, financials, internet services, and retail or trading. More importantly, only two companies, SK Energy (SK Corp) and LG Electronics, belong to the eight target industries which have been participating in the government's energy efficiency task forces. Although both companies have carbon monitoring systems in place, management policies on the disclosure of carbon-related information and strategies are yet to be finalized. Malaysia Malaysia's lone respondent in 2007 was Maybank, the country's leading bank. A repeat respondent, Maybank lacks formal programs focused on climate change but expects to focus on new lending and operational strategies in support of government policies. Singapore In keeping with Singapore's diversified market, CDP Asia's three responses are a microcosm of some of the key trends we find in the overall Asian sample in Financial sector respondents like OCBC appear to be at the early stages of addressing the broader implications of climate change on both operations and lending policies. Singapore Airlines, although less rigorous than Hong Kong's Cathay Pacific, reported emissions and may be motivated to undertake more serious work as pending EU emissions caps come into view. Property developer Capitaland, a first-time respondent, is not ready to report emissions, but did identify a range of internal and external drivers which will support its efforts to extend its Singapore responses are a microcosm of regional trends 9

20 Taiwan The Taiwan sample was predictably dominated by the leading names in Taiwan's listed technology sector. In keeping with the strong operational controls common to the tech sector, responses displayed good familiarity with the vocabulary of environmental and carbon management. Responses were divided equally between veteran and new respondents. TSMC and UMC, Taiwan's leading semiconductor companies, both referenced their participation in the TSIA program on PFCs. Only UMC's response included carbon emissions data however. Although not directly linked to the carbon discussion, Acer's response was unique in discussing a range of product design initiatives intended to cut the energy footprint of its PC products. Thailand Thailand's two CDP respondents offered useful insights into the reporting potential of Asian companies in high impact sectors. PTT, the Thai government-controlled oil and gas company, and Siam Cement, a diversified building materials company, are high profile domestic companies that will be expected to take a leadership role. The response from Siam Cement was notable for a new CDP respondent, although it has published information in previous sustainability reports. In addition to submitting third-party verified GHG emissions data, Siam Cement was able to describe a range of company initiatives which appear to reflect its participation in the WBCSD Cement Sustainability Initiative. PTT's response was less detailed but indicates a solid grasp of the issues and progress on more systematic programs including CDM projects. Sector Focus Two Leaders, Two Laggards Asian Bankers Waiting for Guidance With several exceptions, the 2007 CDP process makes it obvious that Asia's banks are making only slow progress in addressing the long-term economic impacts of climate change. It is tempting to see the limited capacity of Asian banks in assessing climate change issues as a by-product of the bureaucratic restrictions faced by Asian bank regulators who often have a narrow policy remit. While global groups such as UNEP FI are broadening their contact base in Asia, many Asian banks lack even the environmental management capacity to address basic operational issues. Asian banks: focused on facilities, worried about economic impacts All of the financial sector respondents displayed at least a basic perception that climate change is a global issue, and two-thirds acknowledged potential business impacts. Only one-third, however, recognized that there might be large-scale economic repercussions. For example, ICICI offered a clear view that the potential long-term impacts on the agricultural economy could be harsh and would have fundamental effects on its business model. Despite the still limited understanding of climate change impacts, two useful strands of reporting were evident from the responses concerning the role of energy efficiency and opportunities for new products. Energy Efficiency The Asian banks reporting in 2007 are gradually identifying energy efficiency as the best means to reduce carbon emissions in their industry. Four of the bank respondents refer to or have implemented energy efficiency programs of varying depth and quality. Most seek to increase efficiency by decreasing air conditioning usage, replacing and minimizing lighting elements, and adjusting office behavior patterns, such as dress codes. Only two of the financial sector respondents had clear energy reduction targets. Two Hong Kong banks, Hang Seng Bank and ICBC, were alone in reporting quantitative data on emissions. Hang Seng Bank, a subsidiary of HSBC, broke down its numbers into specific categories, detailing the degree of attention Hang Seng is giving to reducing its carbon footprint. 10 Association for Sustainable & Responsible Investment in Asia

21 Harnessing Consumer Sentiment The bank respondents primarily viewed climate change, heightened public awareness, and shifting consumer sentiment as an opportunity to offer new investment products. Ironically this trend was most evident in less thorough responses from banks which did not see any direct risk to their business from climate change. In general, those respondents with a more developed grasp of the issues placed greater emphasis on carbon emissions data, energy efficiency, and other initiatives. Stronger reporters such as Hang Seng Bank focused on the creation of external programs such as awards for energy efficient factories in Guangdong and customer education programs focused on carbon emissions. ICICI also stands above other financials for its commitment to carbon and other sustainability issues. Understanding risks from climate change, ICICI approaches carbon finance as an opportunity to influence its industry through a number of public initiatives that promote good governance, energy efficiency, green buildings and zero emissions automobile development. Asian Utilities Hiding Under a Cloud With the exception of a handful of well covered respondents, Asia's fastest-growing coal-fired power companies are still absent from CDP. Hong Kong's CLP Holdings and Hongkong Electric, as well as Korea's KEPCO, are now established participants in CDP and have a developed investor dialogue covering emissions trends, strategic choices, and renewables and CDM initiatives. By contrast, China's most influential power companies Huaneng International and Datang have not yet provided any material data on emissions or formal policies to CDP or the investment community at large. The lack of disclosure by this politically sensitive sector is a by-product of the ongoing, but in many instances, still opaque policy debate on climate change by Asian governments. Indeed, where governments have yet to establish a clear policy framework, it unfortunately appears premature to expect government-invested or -controlled power companies to take the initiative in disclosing emissions or articulating critical policy objectives. At this stage, even preliminary responses from companies like India's National Thermal Power Company are of interest as a rare insight into the current and still low level of capacity on this issue in Asia's fastest growing countries. No Kyoto, no disclosure for most Asian utilities Asia's Tech Players Demonstrating New Carbon Sophistication The Asian tech sector is emerging as a strong reporter on environmentally-linked issues including carbon. Asia's leading tech companies, including global giants like Samsung, TSMC, and Infosys appear to be making systematic efforts to match the breadth and depth of reporting common to their global competitors. For supply chain companies in the consumer electronics and components sector, engagement with international customers has provided a baseline of knowledge about the environmental management standards of global markets. Virtually all of the tech sector respondents framed their responses in terms of the need to stay competitive in a low-cost and loosely regulated sector. In this context, the development of innovative energy efficient products is a frequently cited goal for Asian tech respondents. Our sample highlighted efficiency improvements to laptops, computers, semiconductors, LCDs, and DRAMs, as well as linked investment and awards these products have received. Although many of the disclosures had a promotional flavor, several of the responses demonstrated an acute awareness of a nuanced but increasingly demanding green marketplace. A new trend which is beginning to affect Asia's tech companies will be the need to play a role in their customers' carbon accounting as brands begin to evaluate their supply chain carbon footprints. While the majority of this year's CDP tech respondents do not monitor carbon emissions in their supply chain, Taiwan's Acer has placed supply chain reporting at the top of its agenda. Once it has finalized new standards, Acer has indicated that it plans to ask suppliers to disclose GHG emissions and energy consumption for every product. Supply chain carbon reporting could be a driver for Asian tech 11

22 This effort also links to an emerging awareness of carbon neutrality. Of the CDP5 respondents seeking to become carbon neutral, 50% are in the tech sector. Although these companies generally stated that climate change is an incidental risk to their operations, a number of statements suggest that they are motivated to embrace carbon neutrality as a tool for becoming more energy efficient and raising brand equity. One example of the approaches being taken by Asia's tech companies comes from Infosys which stated that it has developed its corporate campuses to create carbon sinks and that it is planning to explore offset strategies. Can You Hear Us Now? Like the tech sector, the five telecom respondents in the 2007 sample China Unicom, India's Bharti Airtel, Taiwan's Chungwha Telecom, Korea's KT Corp. and SK Telecom set a generally high standard on carbon reporting. With the exception of China Unicom, all of the companies disclosed carbon emissions. It is also apparent that the respondents, especially the wireless players, understand that they are one of the few sectors which can benefit strategically from carbon-linked trends. Whether talking about wireless banking or navigation devices, Asia's wireless players are keen to be viewed as solution-providers in a carbonconstrained world. As Bharti Airtel succinctly expressed it, "communications technology is a great enabler..." A second common theme in the telecoms responses is the recognition that their physical assets are at risk due to adverse weather conditions and higher ambient temperatures. This is a particular worry for operators in typhoon- and flood-prone regions in Asia. Risk to facilities and related service failures obviously pose a serious financial and reputation threat to companies as which are often heavily regulated. 12 Association for Sustainable & Responsible Investment in Asia

23 Country Regulations The regulatory infrastructure for company work on carbon emissions is still immature in Asia. In CDP4, we surveyed Asian regulatory standards and found that aspirational targets with limited market impact were the norm. For CDP5, we have updated our summaries of country-level regulations and find that, although there has been progress, most Asian countries are making slow progress on the policies which will be crucial to a meaningful response to climate change. In part, this reflects the complex regional politics of the post-kyoto regime. It also reflects the challenges that Asia s highly competitive economies face when implementing complex policies which can affect competitiveness in globally-priced commodity product markets. Each country in the CDP5 Asia ex-japan report is a non-annex 1 country under the Kyoto Protocol and as such does not have mandatory carbon emissions reduction targets. As signatories, however, they can establish a Designated National Authority (DNA) and participate in the Clean Development Mechanism (CDM). Only Taiwan is not a signatory of the Kyoto Protocol, complicating the involvement of Taiwanese companies in the CDM. The following review of country-specific carbon-related legislation is based on the best publicly available information. China China revealed its first national plan on climate change, the National Climate Change Program (NCCP), in June The plan promised to adopt administrative, economic, and legislative measures to increase power efficiency, promote renewable energy, and enlist local authorities' support to cut GHG emissions. The plan cited economic development and poverty eradication as the first and overriding priorities, while announcing measures to cut emissions including the promotion of hydroelectric power and other clean energy sources, development and use of new energy-saving technologies, the improvement of agricultural infrastructure, tree-planting, greater public awareness of the climate change issue, and market measures such as resource pricing reform. The Measures for Operation and Management of CDM Projects, effective as of October 2005, aimed to facilitate the implementation of CDM projects in China in accordance with the United Nations Framework Convention on Climate Change and the Kyoto Protocol. It specifies energy efficiency improvement, the development and utilization of new and renewable energy, and methane recovery and utilization as priority areas for development. The Renewable Energy Law was established as a statutory framework for the development of renewable energy in China. Introduced in 2005 and effective as of January 2006, this framework set generation levels to be sourced from renewable energy providers that energy distributors must purchase. The goal is to have renewables account for 16% of the total energy portfolio by Slowly Materializing 13

24 Asian countries focusing on energy efficiency Hong Kong At present, Hong Kong does not have any existing government initiatives in the pipeline to establish mandatory carbon emissions reduction targets for the private sector. Efforts in the area of climate change have primarily been the by-product of initiatives to reduce air pollution and increase energy efficiency. In January 2007, an implementation framework was released for a pilot emissions trading scheme (ETS) for cross-border Hong Kong - Guangzhou thermal power plants. This framework, however, is limited in scope and entirely voluntary. It also appears to have been designed to facilitate bilateral trades between interested parties, rather than to facilitate an emissions trading market. 1 India India's Energy Conservation Act of 2001 set up legal, institutional, and regulatory mechanisms to drive energy efficiency, but participation is voluntary and not mandatory. As a Kyoto Protocol signatory, the Ministry of Environment and Forests (MoEF) houses the National Clean Development Mechanism Authority (NCDMA). India's climate-related initiatives are primarily focused on the administration of CDM projects. Indonesia Indonesia has no discrete regulations related to GHG emissions. Factory transparency has been addressed at the periphery of a voluntary disclosure program for pollution control, the Program for Pollution Control, Evaluation, and Rating (PROPER) administered by The Environmental Impact and Management Agency (BAPEDAL). This program was suspended from 1998 to In 2005, Indonesia s participation in the CDM was promulgated under Minister of Environment Decree. Korea Policies covering climate change in Korea have focused on government-industry collaboration, often involving industry associations, to set standards and reduction targets. Most recently, in September 2006, the Korean Government established the National Energy Committee which will oversee the implementation of a national emissions trading system that will officially start by the end of The government will also set national targets for carbon emissions reduction sometime in 2008 based on carbon emissions data gathered from the national GHG registry. This will be followed by allocation of carbon reduction targets for each industry. Additional measures to enhance energy efficiency will include (1) increasing the use of renewable energy; (2) further strengthening voluntary agreements for energy saving and GHG emissions reduction with industries; and (3) stimulating clean technology such as carbon sequestration and storage and renewable energy technologies. Malaysia In Malaysia there are currently no government regulations covering climate change. The use of renewable energy resources is one of the key strategies promoted under the Ninth Malaysia Plan of 2006, but participation is as yet voluntary. Malaysia participates in the CDM through their National Carbon Committee and the DNA run by their National CDM Committee housed in the Ministry of Natural Resources and Environment. CDM is the tool of choice Philippines There are currently no initiatives regarding climate change in the Philippines. Activities related to climate change only occur in the development and approval of CDM projects under the Kyoto Protocol. The Designated National Authority (DNA) in the Philippines is administered by the Department of Environment and Natural Resources (DENR). 1 Still Holding Our Breath, Civic Exchange, Association for Sustainable & Responsible Investment in Asia

25 Singapore Singapore is a non-annex 1 country under the Kyoto Protocol and as such there is no GHG reduction target. Government agencies currently prefer the use of voluntary schemes rather than legislation to encourage industry to adopt environmentally friendly activities. Such schemes include internal energy audits for oil refineries and petrochemical plants, improvement of energy efficiency, and awards for environmentally friendly buildings. Taiwan Taiwan's GHG Reduction Act, currently under review by the Legislative Yuan, proposes to set a national GHG reduction target. Once approved, it mandates responsible government agencies to set up a GHG emissions quota, develop standards and penalties for each sector, and establish mechanisms for an emissions inventory, registration, and verification. The draft Act also allows trading in CO 2 emissions quotas, and permits the extra emissions reductions achieved by companies to be credited to their accounts for trading or use with new investment projects. Taiwan is not a signatory of the Kyoto Protocol. Thailand The current version of Thailand's Climate Change Strategy (August 2005) integrates CDM schemes into its strategy. Thailand is in the process of establishing a DNA as an independent body to approve CDM projects in Thailand. Support for GHG-reduction is available from the Thai government, including direct financial support in the form of low interest loans, tax reduction, insurance, and technology transfer. Table 2. Company CDM Initiatives 15

26 Thanks to the expansion of the Asian sample in 2007 and greater focus on market capitalization in the selection criteria, the Asian sample has a higher mix of companies from India, Korea, and Hong Kong/China, many of which are well known to international investors.

27 Data Analysis New Data, New Depth Global Overview Figure 1. Asia Ex-Japan Response Rates The responses to the CDP5 questionnaire were analyzed according to the following response categories: Answered Questionnaires (AQ) Provided Information (IN) Declined to Participate (DP) No Response (NR) As with CDP4, the high response rate amongst FTSE 100 companies is indicative of the fact that most of these companies are subject to both regulatory constraints and market opportunities and have been part of previous CDP surveys. In addition, FTSE100 companies are exposed to a more diverse set of stakeholder pressures than their Asian counterparts. They are amongst the largest companies in the world and many of them have significant emissions. Recent research indicates that these companies are responsible for approximately 1.6% of global emissions 2. They also have a diverse range of shareholders and their operations tend to be global rather than regional. As a result, their operations, especially those in developing countries, are susceptible to NGO scrutiny. The Asia ex-japan sample in CDP5 consisted of 166 companies that were compiled from the FTSE All Cap Asia-Pacific Region index of companies by freefloat adjusted market capitalization. It consisted of the Asia 80, supplemented with the Asian constituents of the global FT500 and a cross-section of names from the India 110, Electric Utility 240, and Transport 100 samples provided by CDP partners. This broad Asian sample of 166 companies had a response rate of 26% the lowest response rate in the CDP universe. This is the same as the response rate recorded in ASrIA s CDP4 report, despite changes in the size and composition of the sample in Figure 2. Global Overview - CDP5 Responses by Sample

28 CDP5 greater focus on broadly held Asian shares, no Chinese A share companies Thanks to the expansion of the Asian sample in 2007 and greater focus on market capitalization in the selection criteria, the Asian sample has a higher mix of companies from India, Korea and Hong Kong/China, many of which are well known to international investors. This change in sample composition reflects a decision to exclude a number of the Chinese utility companies. These companies had been included in the 2006 sample despite the fact that they were Chinese A shares and were therefore restricted to domestic ownership. Figure 3. Asian Country Representation Veteran and New Participation Consistent with trends noted in 2006, we continue to detect learning curve effects as companies which initially receive the information request, but fail to respond due to inexperience, eventually develop the systems and policy needed to provide a complete answer. As a result, we note that participation improves gradually with continued inclusion. Of the 84 veteran companies from 2006, three more responded, increasing the response rate to 39% in the overall Asia universe. This rate outstripped the response rate of new companies, which was a much lower 15%. Figure 4. Response Rates of CDP4 vs. CDP5 Veteran Participants Figure 5. Response Rates of Veteran vs. New Participants 18 Association for Sustainable & Responsible Investment in Asia

29 Market Capitalization As market capitalization increases, so does the rate of response. This reflects the greater ability, commitment and stakeholder influence on high profile companies to be more engaged in the climate change issue. The link between average market capitalizations and response rates is particularly noticeable in the case of Hong Kong and Korea where we see significantly higher response rates for the larger companies by market capitalization. The China sample appears to be something of an outlier, reflecting the low response rate of most of the large Chinese companies. While we are beginning to note gradual progress in CSR reporting in China, relatively few large Chinese companies possess the data or management commitment needed to address climate change issues at the company level. Strong link between market cap and response rates in Asia s developed markets Figure 6. Response Rates by Market Capitalization Note: Market Capitalization as of 29 August 2007 Figure 7. Average Market Capitalization by Country 19

30 Regional Assessment Response patterns across the Asia ex-japan sample were diverse. The majority of the surveys were sent to Hong Kong, India, and Korea countries with a large cohort of large market capitalization companies. Companies from these three countries represented 56% of the companies sampled. It should also be noted that the Hong Kong sample includes some Chinese companies which have listed via Hong Kong entities, thereby broadening the geographic reach of the Hong Kong sample. Diverse response trends reflecting company maturity and sector composition India, with the second highest portion of the sample, had the highest response rate of 42%, followed by Korea and Hong Kong. The quality of responses received from India was, however, less consistent than those from Korean companies reflecting the strong regulatory mechanisms and policy guidance provided by the Korean government. Responses from Taiwan companies were largely concentrated in the tech sector and appear to reflect the growing role played by industry associations in Taiwan. The Hong Kong sample was comparatively diverse and although there were a number of strong responses, overall response rates continue to suffer from a lack of guidance to key sectors such as property. Response patterns remain unpredictable in the China sample with China Life Insurance, the one company to participate in the survey last year, declining to participate this year. Nonetheless, one of China s leading mobile phone companies, China Unicom, responded for the first time. It is notable that both companies come from less carbon-intensive sectors, the financials and telecommunication services, which can make it easier to provide an initial response. At the same time, ICBC, the large Chinese bank which is grouped in the Hong Kong sample, submitted a response in its first year as a listed company. Figure 8. Regional Overview of Response Numbers of Asia ex-japan Companies 20 Association for Sustainable & Responsible Investment in Asia

31 Sector Assessment In developed markets where CDP has a longer history, it is common to see higher response rates for carbon-intensive industries such as utilities, heavy industry, and energy. In part, this reflects the fact that EU companies are subject to announced emissions caps and emissions disclosure is, therefore, a material financial issue. In the Asia sample, however, higher response rates are associated with the lower impact and export-oriented sectors such as telecoms and IT. Not only do these companies perceive lower operating risks from climate change, but they often face less significant reporting challenges in assessing their carbon footprint. For example, telecom companies have a low share of the total sample, but the highest response rate, reflecting user-friendly carbon calculators for the sector. By contrast, Asian financials have a low response rate, despite their large share of the sample, seemingly due to the perception that they face limited carbon risks. Low impact sectors dominate Asian response The energy sector was the exception for the carbon-intense sectors, recording a relatively high response rate despite having a low share of the sample. This may indicate global peer pressure and marketplace incentives for the energy sector to directly calculate and monitor emissions levels. Figure 9. Responses by Sector Figure 10. Response Rates and Sample Share by Sector 21

32 India versus Korea A story of experienced Korean and first-time Indian reporters The different response patterns emerging from countries like India and Korea is a key theme in our 2007 CDP report. Indeed, comparing responses from these two critical countries is difficult at best. Korea has established regulatory mechanisms. Those in India are embryonic. While both India and Korea represent the largest share of participants and the largest number of respondents after Hong Kong, 50% of the Indian respondents are new while 80% of the Korean respondents are veterans. The other 20% of responses from Korea are from companies which have previously received the information request. Statistically, the comparison by sector does not appear particularly distinct at the sector level with the exception of the industrial and financial sectors where the Indian sample has higher response rates. It should be noted that the Indian financial responses were all new respondents. Without government guidance, Korean industrials do not respond Korea was one of the few countries in the sample that had industrial companies providing information but failing to respond fully to the information request. Two of the companies submitted sustainability reports while the other had data, but indicated they lacked a clear disclosure policy which was needed to support a formal response. Although reasons for non-participation by Korean industrials doubtless vary, many of the companies fall outside of the groups currently subject to guidance by the Korean government on carbon emissions management and reporting. Figure 11. Response Patterns in India and Korea Note: Veteran = Responded to both CDP4 and CDP5 New Respondents = Did not respond to CDP4 but to CDP5 New Participants = New to CDP5 22 Association for Sustainable & Responsible Investment in Asia

33 Figure 12. Response Patterns in India and Korea by Sector India Korea Governance Matters Companies that report having upper management and board-level involvement in climate change issues are much more engaged in the process of carbon disclosure. In comparison to companies without upper management and boardlevel involvement, such companies are more likely to have considered emissions trading schemes, conducted verification of their emissions data, disclosed Scope 1 and Scope 2 data, or implemented emissions reduction programs. In addition, top management engagement is reflected in better disclosure of hard, quantitative engagement. Top level and board engagement a key to better disclosure By contrast, companies without board-level or upper management engagement demonstrate a more qualitative approach to climate change issues. They tend to perceive more general, commercial and physical trends without submitting data or considering the quantitative aspects of carbon disclosure. This suggests that operating teams submitting responses are tentative about releasing hard data without upper level accountability. The importance of company boards and top management involvement in carbon issues is also significant as it is positively correlated with external audits of carbon emissions data which increases the credibility of the process both for companies and public stakeholders. 23

34 Table 3. Top Level Management and Board Engagement in Carbon Issues Quantitative Disclosure The most important change in quantitative emissions disclosure patterns in 2007 was the significant increase in Scope 1 emissions disclosures which set the stage for greater transparency and comparability. Almost fifty percent of the companies that answered the questionnaire this year provided Scope 1 emissions data. Companies from Hong Kong and Korea were responsible for much of this increase. This positive trend likely reflects two underlying factors. The first is the growing maturity of a core group of veteran reporters. Many of these companies have been steadily upgrading their reporting systems, moving toward global reporting norms. This is particularly true of companies from carbon-intense sectors such as industrials, utilities, and materials. The second trend illustrated in the data is the presence of greater board and top-management oversight. In general, companies with board-level engagement appear more likely to want assurances that data gathering systems and disclosure practices are in line with global norms. Figure 13. Companies with Quantitative Emissions Data Figure 14. Disclosure Patterns by Company Market Capitalization 24 Association for Sustainable & Responsible Investment in Asia

35 GHG Protocol Initiative The Greenhouse Gas Protocol Initiative (GHG Protocol) aims at harmonizing GHG accounting and reporting standards internationally by encouraging consistent approaches to GHG accounting. The development of these standards and corresponding tools has become increasingly relevant since the ratification of the Kyoto Protocol and the development of national, and other relevant GHG emissions trading schemes, both within and outside of the Kyoto framework. It defines three 'scopes' for reporting purposes. Scope 1: Direct GHG emissions Companies report GHG emissions from sources they own or control. Scope 2: Electricity indirect GHG emissions Companies report the emissions from the generation of purchased electricity that is consumed in its owned or controlled equipment or operations. Scope 3: Other indirect GHG emissions Scope 3 is an optional reporting category that allows for the treatment of all other indirect emissions. They occur from sources not owned or controlled by the company. For more information, see Figure 15. Quantitative Disclosure by Country Figure 16. Quantitative Disclosure by Sector 25

36 The Carbon Disclosure Project A Dialogue Between Investors and Corporations In February 2007, CDP issued its fifth information request on behalf of 315 institutional investors with assets of USD 41 trillion under management. The request was sent to 2,400 of the largest publicly listed companies in the world by market capitalization for disclosure of investment-relevant information concerning the risks and opportunities facing these companies due to climate change. These companies included specific groups of companies in Asia, Australia, Brazil, Canada, France, Germany, India, Italy, Japan, New Zealand, Scandinavia, South Africa, Switzerland, the UK, and the US. In addition, companies in the electric utilities and transport sectors received the information request. As in previous years, the request focused upon the issues CDP has identified in conjunction with many signatory investors, corporations and other experts as being most pertinent to the effect of climate change on company value. Those issues include risks and opportunities related to regulatory trends, changes in the physical environment, and consumer sentiment. Specific questions are also asked about total companywide global GHG emissions and steps taken to manage and reduce emissions. 76% of FT500 companies and a total of 1,300 corporations answered the fifth CDP request in 2007, evidencing a significant increase in support for CDP's work from the 45% of FT500 companies and 235 corporations that answered the first request in "The aim of CDP is to gradually improve information on CO 2 emissions and climate strategies as well as to initiate long-term plans for the future. I wish the Carbon Disclosure Project success with its further efforts both in Germany and worldwide." Angela Merkel, German Chancellor This report specifically focuses on disclosures from the Asia ex-japan sample of companies. Data on Asian companies was drawn from responses to the Asia 80 sample identified by ASrIA, the global FT500, the electric utilities and transport samples, and the newly expanded India sample. In total, 166 companies in Asia ex-japan were sent the information request and 44 companies ultimately submitted responses. CDP data has enabled investors, policymakers, service providers, and NGOs to accelerate their own initiatives. Last year CDP reports were produced in English, French, German, Japanese and Portuguese and launched at a series of high profile events in the main capital markets in the world. CDP now hosts the largest registry of corporate greenhouse gas data in the world, and this information along with reports analyzing it can be downloaded free of charge at 26 Association for Sustainable & Responsible Investment in Asia

37 Future Plans CDP's primary goal is to continue to improve the quality and quantity of responses for its core disclosure activity and in doing so better inform the decision-making of investors and corporations regarding the implications of climate change. In 2007, new initiatives include the launch of a user-friendly interface to its comprehensive database of responses. CDP has also initiated a Supply Chain Leadership Collaboration project to work with key sector leaders in the retail, aviation, automotive, and government sectors to help identify and reduce supply chain emissions. CDP also became a member of the Climate Disclosure Standards Board (CDSB) convened by the World Economic Forum in January 2007 and has been funded by the UK Department for Environment to provide the Secretariat to CDSB. CDP will also continue to respond to stakeholder requests to expand, and in addition to the new initiatives for 2007 is developing further projects including: Expansion of the CDP process into further geographies and sectors Expansion of the CDP process into private equity and private companies Workshops for corporations and investors Further development of the CDP database Assisting Pension Funds to develop mandates incorporating climate change criteria "The first step towards managing carbon emissions is to measure them. Because in business what gets measured gets managed. The Carbon Disclosure Project has played a crucial role in encouraging companies to take the first steps in that measurement and management path. If more businesses progress further down that measurement and management path, within the context of public policy which spurs on the business leaders and drags up the business laggards, then we will be able and at surprisingly small economic cost to offset the dangers which climate change poses to our world." Lord Adair Turner, Standard Chartered plc 27

38 Appendix I CDP5 Questionnaire Carbon Disclosure Project (CDP5) Greenhouse Gas Emissions Questionnaire We request a reply to the following questions by the 31st May Please answer the questions as comprehensively as possible or state the reasons why you are unable to supply the information requested. If at this stage you can only provide indicative information we still welcome this, as a best guess?is more valuable to us than no response. One of the main objectives this year is to improve the quality of the responses and standardize reporting to facilitate better comparison of data across and within sectors. We therefore request that answers to the following questions are provided for your company as defined in your consolidated audited financial statements. If you are unable to respond on this basis, please explain why and detail the reporting boundaries you have used. We recognize GHG emissions and climate change have varying impacts on sectors and companies. We have therefore divided the questionnaire into two sections to reflect these differences. Companies are encouraged to answer both parts of the questionnaire where relevant. Section A: For all companies to complete. Section B: For the following companies to complete: 1. Companies with combustion installations with a rated thermal input exceeding 20 MW. 2. Companies involved in the following sectors: automobiles & components aerospace & defense chemicals construction materials electric utilities energy equipment & services oil, gas & consumable fuels metals & mining paper & forest products transportation 3. Companies in any sector that may be significantly influenced by GHG emissions or climate change. New procedures for CDP in Please use our website for direct data entry via If necessary, send your response electronically in English to the Project Coordinator at [email protected]. Your response will be made publicly available at in September 2007, unless you notify us to the contrary. If you inform us that you do not want your information disclosed, we will only use it in production of aggregate statistics. For additional guidance and information please see the Further Information attached to this questionnaire, or refer to the Reporting Guidance section at 28 Association for Sustainable & Responsible Investment in Asia

39 Section A: For all companies to complete 1 Climate Change Risks, Opportunities and Strategy For each question please state the time period and where possible the associated financial implications. a i ii iii b c d Risks: What commercial risks does climate change present to your company including, but not limited to, those listed below? Regulatory risks associated with current and/or expected government policy on climate change e.g. emissions limits or energy efficiency standards. Physical risks to your business operations from scenarios identified by the Intergovernmental Panel on Climate Change or other expert bodies, such as sea level rise, extreme weather events and resource shortages. Other risks including shifts in consumer attitude and demand. Opportunities: What commercial opportunities does climate change present to your company for both existing and new products and services? Strategy: Please detail the objectives and targets of the strategies you have undertaken or are planning to take to manage these risks and opportunities. Please include adaptation to physical risks. Reduction targets: What are your emissions reduction targets and time frames to achieve them? What renewable energy and energy efficiency activities are you undertaking to manage your emissions? (This question not required if answering Section B.) 2 Greenhouse Gas Emissions Accounting 1 a Methodology: Please provide the following information on your company s emissions measurements: i The accounting year used to report GHG emissions. 2 ii The methodology by which emissions are calculated. iii Whether the information provided has been externally verified or audited. iv An explanation for any significant variations in emissions from year to year, e.g. due to major acquisitions, divestments, introduction of new technologies, etc. b Scope 1 and 2 of GHG Protocol: Direct and Indirect GHG emissions and electricity consumption. 3 Please complete the table below for tonnes CO 2 e emitted and electricity consumption: Scope 1 activity tonnes CO 2 e emitted Scope 2 activity tonnes CO 2 e emitted MWh of purchased electricity Percentage of purchased MWh from renewables Globally Annex B Countries c i ii iii iv Scope 3 of GHG Protocol: Other Indirect GHG emissions. Where feasible please provide estimates for the following categories of emissions: Use/disposal of company s products and services. Your supply chain. External distribution/logistics. Employee business travel. 1 The six main Greenhouse Gases are carbon dioxide (CO2 ), methane (CH 4 ), nitrous oxide (N 2 O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF 6 ). 2 If you are responding to CDP for the first time, please provide details where available, of emissions for the last three measurement cycles. 3 For the purposes of responding to this section, please follow the World Resources Institute (WRI), World Business Council for Sustainable Development s (WBCSD s) Greenhouse Gas Protocol (corporate standard revised version), details of which can be found at 29

40 Section B: To be completed by companies 3 Additional Greenhouse Gas Emissions Accounting Using the methodology as set out in 2(a), please state your Scope 1 and 2 emissions as follows: a b c Countries: For each country in which you have operations, where available. Facilities: For facilities covered by the EU Emissions Trading Scheme (EU ETS). Please also include the number of allowances you were issued under the applicable National Allocation Plans. EU ETS impact: What has been the impact on your profitability of the EU Emissions Trading Scheme? 4 Greenhouse Gas Emissions Management a i ii iii iv v b c d e Reduction programmes: What emission reduction programs does your company have in place? Please include any reduction programs related to your operations, energy consumption, supply chain and product use/disposal. What is the baseline year for the emissions reduction program? What are the emissions reduction targets and over what period do those targets extend? What investment has been/will be required to achieve the targets and over what time period? What emissions reductions and associated costs or savings have been achieved to date as a result of the program? What renewable energy and energy efficiency activities are you undertaking to manage your emissions? Emissions trading: What is your company s strategy for trading in the EU Emissions Trading Scheme, CDM/ JI projects and other trading systems (e.g. CCX, RGGI, etc), where relevant? Emissions intensity: Please state which measurement you believe best describes your company s emissions intensity performance? What are your historical and current emissions intensity measurements? What are your targets? Energy costs: What are the total costs of your energy consumption e.g. from fossil fuels and electric power? What percentage of your total operating costs does this represent? Planning: Do you estimate your company s future emissions? If so please provide details of these estimates and summarize the methodology for this. How do you factor the cost of future emissions into capital expenditure planning? Have these considerations made an impact on your investment decisions? 5 Climate Change Governance a i ii b Responsibility: Which Board Committee or other executive body has overall responsibility for climate change? What is the mechanism by which the Board or other executive body reviews the company s progress and status regarding climate change? Individual performance: Do you provide incentive mechanisms for managers with reference to activities relating to climate change strategy, including attainment of GHG targets? If so, please provide details. 30 Association for Sustainable & Responsible Investment in Asia

41 Appendix II Glossary Kyoto Protocol A protocol to the International Convention on Climate Change (ICCC) once entered into force, it will require countries listed in its Annex B (developed nations) to meet reduction targets of greenhouse gas (GHG) emissions relative to their 1990 levels during the period Greenhouse Gas (GHG) A gas that absorbs and re-emits infrared radiation, warming the earth's surface and contributing to climate change (United Nations Environment Program, 1998). Some of these gases occur naturally in the atmosphere, while others are a result of human activities, i.e. burning fossil fuels such as coal. The Clean Development Mechanism (CDM) The CDM refers to climate change mitigation projects undertaken between Annex 1 countries and non-annex 1 countries. In this mechanism, project investments must contribute to the sustainable development of the non-annex 1 host country and must also be independently certified. Certified Emissions Reduction (CER) A Certified Emissions Reduction (CER) is the term for the output of CDM projects, as defined by the Kyoto Protocol. Designated National Authority (DNA) A Designated National Authority is an established government agency responsible for implementing the Clean Development Mechanism (CDM) in its home country. Annex 1 Countries These are the 36 industrialized countries and economies in transition listed in Annex 1 of the United Nations Framework Convention on Climate Change (UNFCCC). Their responsibilities under the Convention are various, and include a non-binding commitment to reducing their human-induced GHG emissions to 1990 levels by the year Annex B Countries These are the 39 emissions-capped industrialized countries and economies in transition listed in Annex B of the Kyoto Protocol. Legally-binding emissions reduction obligations for Annex B countries range from an 8 percent decrease (e.g. EC) to a 10 percent increase (Iceland) on 1990 levels by the first commitment period of the Protocol, Non-Annex 1 Countries These are developing countries recognized by the Convention as being especially vulnerable to the adverse impacts of climate change, including potential economic impacts of climate change response measures. These do not have binding emissions reduction targets and are currently not allowed to participate in the international emissions trading market. They can, however, benefit from participation in Clean Development Mechanism (CDM) projects with participating Annex I countries or other non-annex I countries. 31

42 Appendix III Asia ex-japan Companies 32 Association for Sustainable & Responsible Investment in Asia

43 33

44 34 Association for Sustainable & Responsible Investment in Asia

45 About ASrIA The Association for Sustainable & Responsible Investment in Asia ASrIA is a not for profit, membership association dedicated to promoting corporate responsibility and sustainable investment practice in the Asia Pacific region. ASrIA's members include investment institutions managing over US$4 trillion in assets, however membership is open to any organisation which has an interest in sustainable investment. ASrIA has taken a leadership role in promoting sustainable investment in Asia since our founding in ASrIA has run conferences, seminars and workshops, and published wideranging research on SRI issues. ASrIA has also created a very wide network of organizations and individuals interested in the broad range of policy issues and investment strategies which are essential to the implementation of SRI in Asia. ASrIA's website, is the primary resource for SRI in Asia, attracting over 4,000 page views per day and over 5,000 subscribers to our regular e-bulletin. Editorial team - This report was written by Scott Linder, Alexander Read-Brown, and Y.K. Park with editing and review by Melissa Brown, Sweeta Motwani, and Christy Lyons. The layout and design of the report was managed by Sky Koon-chow Ng. About The Sigrid Rausing Trust THE SIGRID RAUSING TRUST The Sigrid Rausing Trust is a philanthropic foundation based in Britain. It was set up ten years ago by Sigrid Rausing as a grant giving trust. It takes as its guiding framework the United Nations Universal Declaration of Human Rights. The Trust s funding categories are all human rights orientated and aim to form a coherent framework for the work of the Trust. Printed on 100% recycled paper

46 Association for Sustainable & Responsible Investment in Asia (ASrIA) Melissa Brown Executive Director Scott Linder Associate Director ASrIA Room 701 Hoseinee House 69, Wyndham Street Central Hong Kong Contacts - Carbon Disclosure Project Paul Dickinson Project Coordinator [email protected] Carbon Disclosure Project Carbon Disclosure Project 40 Bowling Green Lane London, EC1R 0NE United Kingdom [email protected] ASrIA does not guarantee that the report is a comprehensive survey of carbon disclosure issues in the region. With the resources available, however, the report makes every effort to focus on key areas of relevance and to deliver data that is accurate and opinions that are objective and balanced. ASrIA 2007 This Report can be quoted for non-commercial purposes with due credit to ASrIA